Glossary
Suitability
Suitability is the sales standard historically applied to brokers, requiring only that a recommended investment be appropriate for the customer's situation — not that it be the best available option.
Under suitability (now largely folded into the SEC's Regulation Best Interest for brokers), a broker could recommend a suitable fund paying a high commission over an equally suitable one costing far less. A fiduciary adviser, by contrast, must put the client's interest first and manage the conflict itself, not merely clear an appropriateness bar.
Why it matters in practice
The distinction explains how investors end up in expensive products that were never illegal to sell: suitable and optimal are different tests. Regulation Best Interest tightened broker obligations, but the compensation structures — commissions, revenue sharing, sales contests — persist. Two questions cut through titles and marketing: are you a fiduciary at all times on this account, and how do you get paid? A firm's Form CRS answers both in writing.
Related terms: Fiduciary · Form CRS · Load Fund · Fee-Only · Registered Investment Adviser (RIA)